Save Article

China IPO Hiatus May Prompt Smaller Firms to Seek HK Listing

The continued suspension of initial public offerings in China, coupled with an expected move by Beijing to grant mainland retail investors direct access to Hong Kong stock, will likely prompt more small and medium enterprises to seek listings in Hong Kong, the head of a Hong Kong-based investment bank says.

Yim Fung, chairman and chief executive of Guotai Junan International Holdings Ltd., said in a recent interview that he expects listings by Chinese SMEs to pick up pace toward the second half of the year. Last year, 38 Chinese firms held IPOs in Hong Kong.

Mr. Fung’s comments come as Chinese regulators have halted approvals for IPOs since October, amid worries that a share glut would add pressure to an already weak market. Although the benchmark Shanghai Composite Index has gained 7.3% so far this year, inspired by signs of a steadily-recovering economy, it had hit a near four-year low in early December and had been one of the world’s worst performers for much of last year.

As of Jan. 31, an unprecedented 873 firms were queuing for IPOs in China.